Tag Archive | "Retail"

The demise of many retail chains is due to the rise of the internet and the inability of some retailers to keep up, says long-time retail executive Gerald Storch. “The proximate cause of the demise of chains like Charlotte Russe, Gymboree, Payless, Toys R Us, and Sears is the rise of the internet and their inability to keep up that environment,” said Storch. “It’s the decline in physical traffic to bricks and mortar stores and the mall.”

Retail Comp Store Sales Up 6 Percent During Holiday

Retail sales have been very strong this holiday. Of course, there are winners and losers. The winners are the people who are doing it right, who are mastering the internet and who are driving value to the customer. You see 4.2 percent out of Walmart, almost 6 percent out of Target, over 7 percent out of Costco, and about 18 percent in the US out of Amazon.

I put out an index called the Storch Advisors Index and the volume weighted comp store sales gain of major chains in the US was 6 percent for the holiday season. Of course, there were some poor performers but that’s because they are not keeping up with the consumer. Whether it’s JC Penny, Sears, Macy’s, Kohls, some of those are becoming yesterdays.

Gov. Report Showing Retail Sales Down is Absurd

I know the folks at the government work hard to collect that data but I think there’s something missing there. The world has changed. First of all the internet has happened and I think that makes a big difference. There is no way, if you look at those numbers it says the internet was down in December. Only a report from Washington could say that. That’s ridiculous. It says the internet underperformed department stores for December. Absolutely absurd.

Why can that be true? Actually, the raw data said that sales were up about 9 percent in December. But then they applied a negative 10 percent seasonality discount because it was December. I’m not sure that discount factor was correct. Among other things, both Cyber Monday and Black Friday fell in November this year and they were huge as we saw by all accounts. There is something a little wonky about that report. I choose to put it on the side and say it’s not typical about what’s really going on in retail right now.

Retail Demise Due to Rise of the Internet and Inability to Keep Up

The proximate cause of the demise of chains like Charlotte Russe, Gymboree, Payless, Toys R Us, and Sears is the rise of the internet and their inability to keep up that environment. It’s the decline in physical traffic to bricks and mortar stores and the mall. The origin though comes down to the fact that all of those companies have one thing in common, hedge funds and private equity put huge leverage on those businesses.

So at a time when the world changed and the internet happened, they had to invest huge sums in the internet and they had to make their stores more beautiful than ever. You can only do that with money. All these firms were leveraged right before, bang, this retail apocalypse happened. They had no money to make any difference. It didn’t matter if you had the best management in the world. The management at Charlotte Russe is pretty damn good. But they couldn’t do anything about it because they didn’t have the money to spend. Walmart did have the money to spend. They’ve been spending it and that you are starting to see in the results.

Walmart and Amazon Battle it Out

You have Walmart buying a lot these ecommerce companies to get stronger in ecommerce. Then you have Amazon buying the bricks and mortar. Why did they do that? One reason. To keep up with Walmart in grocery. Grocery is the ultimate perishable, food. It has a lot of waste. Grocery is already around the corner from everyone’s homes. You have to ship them from the stores. Walmart has the stores to do it and they are proving it now. Groceries is one of their best performers in the latest quarter.

Amazon was looking at how do we beat Walmart in grocery? Grocery is a huge market and one of the last ones that Amazon hasn’t conquered. They thought, well, we could try to ship it from wholesalers and centralized locations. They started that way and it does not work. So they bought Whole Foods so they could be around the corner from people’s homes. That’s why they are expanding Whole Foods. They may be the only grocer in the country that is adding locations, all so they can ship to your home.

With the future of retail we have crossed over the demarcation line, says Walter Robb, the former co-CEO of Whole Foods. “We’re not going back to the old retail,” said Robb. “It’s just not going to happen. That’s the combination of digital and physical. We’re in what I would call new retail, which is the integration.”

Traditional Retail Models Are Under Pressure

From where I sit the customer is doing pretty well. They’re spending. They’re pretty strong. There was a lot of pessimism at the back half of last year that was reflected in some of the stock prices, but I think that was overblown. We’re going to see a customer that’s doing pretty well this year in 2019 and might surprise a little bit to the upside. That being said, traditional retail models are under pressure. The customer is spending their dollars in so many different ways and places than they could before. You used to just open up four walls and open a store and now the customer has so many more options.

We do know that in the United States we’re about 24 square feet of retail space per capita and that’s two and a half times more than any other industrialized country. We have too much space so there’s going to be a winnowing out that’s going to happen here. There’s going to be winners and losers and we’re already seeing that. In 2019, I think that continues, but I do think that we’re in the second half of that. What we’re actually seeing that the mall is beginning to switch over and putting in exciting new uses and we’re seeing retail stores start to open again.

We Are Not Going Back to Old Retail

With the future of retail, we have crossed over the demarcation line. We’re not going back to the old retail. It’s just not going to happen. That’s the combination of digital and physical. You’re seeing the digital retailers, the Allbirds, the Warby Parker’s, come out and say, alright we’re going to open physical stores because we realize our customers want to experience our brand and be with us in that way. They’re bringing new ideas to that presentation of retail, which is pretty exciting.

At the same time, you’re seeing physical retailers adapt to digital ways. Take a look at Target and how they’ve employed all the new tools that they have for the customers, in-store apps and those sorts of things. You’re seeing a combination of these two. In some cases it’s adolescent and in some case it’s more mature, but we are not going back to just the simple form retailer. We’re in what I would call new retail, which is the integration.

The edge of which is actually in China with a supermarket called Hema from Alibaba, which is which is simply fantastic. It’s integrated on the back end and on the front end. I think you’re seeing retailers say, we’ve adapted to the age of Amazon and we understand this is how customers want to shop. We’re seeing a whole new generation of businesses and entrepreneurs say, I’m going to bring the customer this fusion of digital and physical in a way that’s really exciting and really compelling. We’re not going back. I opened my first store in 1978 but that’s just not as easy to do anymore because you have to have that the tools to really understand your customer personally. I think it’s pretty exciting to see what’s happening.

Physical and Digital Retailers Need Each Other

The business model on the last mile is very challenging unless you’re connected into a physical store. If you just out there floating without a connection to physical retail those have not proven to be sustainable. I think it’s clear to me that the customer wants that choice. I think the data is very clear that they want both. They’re not going to give up physical stores and that’s why you’re seeing these digital and physical retailers. They need each other and they need both parts of that to make the thing actually compelling for the customer.

I think there’ll be a shakeout. You seem some consolidation already, but the most interesting combinations are where the physical retailer buys the digital, where Target buys Shipt and where Walmart buys Flipkart or whatever you see around the world, realizing the combination is the most powerful. That will be the most sustainable from a business model perspective.

We Are Not Going Back to Old Retail, Says Walter Robb, former co-CEO of Whole Foods

Nike has created an amazing store in New York City that truly integrates the digital experience with physical retail. The worlds of physical and digital are not really separated for consumers the way we may have thought says Heidi O’Neil, the President Nike Direct. Clearly, brick and mortar retail is not dead, it’s just changing and Nike is showing the world how it can be done.

Physical and Digital Together Create an Incredible Consumer Experience

“It’s interesting with all of the medium crests around the death of retail, what we found, at least with our Nike consumers, is over 80 percent of consumers actually want a physical experience as part of their shopping experience,” says Heidi O’Neil, President of Nike Direct. “The worlds of physical and digital are not really separated for consumers the way we may have thought about it when we were thinking about the death of retail. In fact, they can really support each other to make an incredible consumer experience.”

Get Every Item on a Mannequin Head-To-Toe Digitally

“When you come in you’ll be welcome to Nike New York,” explained Sean Madden, Senior Director of Product, Nike Direct. “On the smartphone screen is what we call Retail Home. We found based on a lot of research that consumers really love mannequins, but they get really frustrated when they can’t find the product that’s on the mannequin. Is it in your size? Is it in your color?

“We’ve built a system where the consumer can simply scan a QR code and they’ll get every item that a mannequin is dressed in from head-to-toe digitally,” said Madden. “We’ve also enabled consumers to build a virtual Try-On List. They can then choose their size and have it sent right to their fitting room.”

Smart Fitting Rooms Offer Lighting Options

“Not only will the product will be waiting for you in the fitting room we’ve also introduced the ability for you to customize the look with lighting so you can see how the product looks on you and will perform in different lighting conditions,” he said. “We want consumers to understand how the product will look in different conditions, especially the New Yorker who is going from their house to sport to work to life and they want a product that can flex with them. They also take a lot of selfies in fitting rooms so good light and an interesting room really helps with that.”

Data Powers the New Nike Speed Shop

“We use data to inform the assortment with New Yorkers favorites in the Speed Shop,” said O’Neil. “Then what we’re also able to do from a data perspective is we’re able to take all the selling information and all the data from what’s happening in the five other floors of the store to have a trendy now experience in the Speed Shop. So as a New Yorker you don’t have to spend half the day here, a couple hours there, you can just go and say I’m getting the absolute best of this store curated for me and refreshed in the day, in the hour.”

No marketing agency staffer feels good when they see a retail client getting reviews like this on the web.

But we can find out why they’re happening, and if we’re going above-and-beyond in our work, we just might be able to catalyze turning things around if we’re committed to being honest with clients and have an actionable strategy for their in-store improvements.

In this post, I’ll highlight some advice from an internal letter at Tesla that I feel is highly applicable to the retail sector. I’d also like to help your agency combat the retail blues headlining the news these days with big brands downsizing, liquidating and closing up shop — I’m going to share a printable infographic with some statistics with you that are almost guaranteed to generate the client positivity so essential to making real change. And, for some further inspiration, I’d like to offer a couple of anecdotes involving an Igloo cooler, a monk, reindeer moss, and reviews.

The genuine pain of retail gone wrong: The elusive cooler, “Corporate,” and the man who could hardly stand

“Hi there,” I greeted the staffer at the customer service counter of the big department store. “Where would I find a small cooler?”

“We don’t have any,” he mumbled.

“You don’t have any coolers? Like, an Igloo cooler to take on a picnic to keep things cold?”

“Maybe over there,” he waved his hand in unconcern.

And I stood there for a minute, expecting him to actually figure this out for me, maybe even guide me to the appropriate aisle, or ask a manager to assist my transaction, if necessary. But in his silence, I walked away.

“Hi there,” I tried with more specificity at the locally owned general store the next day. “Where would I find something like a small Igloo cooler to keep things cold on a picnic?”

“I don’t know,” the staffer replied.

“Oh…” I said, uncomfortably.

“It could be upstairs somewhere,” he hazarded, and left me to quest for the second floor, which appeared to be a possibly-non-code-compliant catch-all attic for random merchandise, where I applied to a second dimly illuminated employee who told me I should probably go downstairs and escalate my question to someone else.

And apparently escalation was necessary, for on the third try, a very tall man was able to lift his gaze to some coolers on a top shelf… within clear view of the checkout counter where the whole thing began.

Why do we all have experiences like this?

“Corporate tells us what to carry” is the almost defensive-sounding refrain I have now received from three employees at two different Whole Foods Markets when asking if they could special order items for me since the Amazon buyout.

Because, you know, before they were Amazon-Whole Foods, staffers would gladly offer to procure anything they didn’t have in stock. Now, if they stop carrying that Scandinavian vitamin D-3 made from the moss eaten by reindeer and I’ve got to have it because I don’t want the kind made by irradiating sheep wool, I’d have to special order an entire case of it to get my hands on a bottle. Because, you know, “Corporate.”

Why does the distance between corporate and customer make me feel like the store I’m standing in, and all of its employees, are powerless? Why am I, the customer, left feeling powerless?

So maybe my search for a cooler, my worries about access to reindeer moss, and the laughable customer service I’ve experienced don’t signal “genuine pain.” But this does:

This is genuine pain.When customer service is failing to the point that badly treated patrons are being further distressed by the sight of fellow shoppers meeting the same fate, the cause is likely built into company structure. And your marketing agency is looking at a bonafide reputation crisis that could presage things like lawsuits, impactful reputation damage, and even closure for your valuable clients.

When you encounter customer service disasters, it begs questions like:

Could no one in my situation access a list of current store inventory, or, barring that, seek out merchandise with me instead of risking the loss of a sale?

Could no one offer to let “corporate” know that I’m dissatisfied with a “customer service policy” that would require me to spend $ 225 to buy a whole case of vitamins? Why am I being treated like a warehouse instead of a person?

Could no one at the pharmacy see a man with a leg wound about to fall over, grab a folding chair for him, and keep him safe, instead of risking a lawsuit?

I think a “no” answer to all three questions proceeds from definite causes. And I think Tesla CEO, Elon Musk, had such causes in mind when he recently penned a letter to his own employees.

“It must be okay for people to talk directly and just make the right thing happen.”

“Communication should travel via the shortest path necessary to get the job done, not through the ‘chain of command.’ Any manager who attempts to enforce chain of command communication will soon find themselves working elsewhere.

A major source of issues is poor communication between depts. The way to solve this is allow free flow of information between all levels. If, in order to get something done between depts, an individual contributor has to talk to their manager, who talks to a director, who talks to a VP, who talks to another VP, who talks to a director, who talks to a manager, who talks to someone doing the actual work, then super dumb things will happen. It must be ok for people to talk directly and just make the right thing happen.

In general, always pick common sense as your guide. If following a ‘company rule’ is obviously ridiculous in a particular situation, such that it would make for a great Dilbert cartoon, then the rule should change.” - Elon Musk, CEO, Tesla

Let’s parlay this uncommon advice into retail. If it’s everyone’s job to access a free flow of information, use common sense, make the right thing happen, and change rules that don’t make sense, then:

Inventory is known by all store staff, and my cooler can be promptly located by any employee, rather than workers appearing helpless.

Employees have the power to push back and insist that, because customers still expect to be able to special order merchandise, a specific store location will maintain this service rather than disappoint consumers.

Pharmacists can recognize that patrons are often quite ill and can immediately place some chairs near the pharmacy counter, rather than close their eyes to suffering.

“But wait,” retailers may say. “How can I trust that an employee’s idea of ‘common sense’ is reliable?”

Let’s ask a monk for the answer.

“He took the time…”

I recently had the pleasure of listening to a talk given by a monk who was defining what it meant to be a good leader. He hearkened back to his young days, and to the man who was then the leader of his community.

“He was a busy man, but he took the time to get to know each of us one-on-one, and to be sure that we knew him. He set an example for me, and I watched him,” the monk explained.

Most monasteries function within a set of established rules, many of which are centuries old. You can think of these guidelines as a sort of policy. In certain communities, it’s perfectly acceptable that some of the members live apart as hermits most of the year, only breaking their meditative existence by checking in with the larger group on important holidays to share what they’ve been working on solo. In others, every hour has its appointed task, from prayer, to farming, to feeding people, to engaging in social activism.

The point is that everyone within a given community knows the basic guidelines, because at some point, they’ve been well-communicated. Beyond that, it is up to the individual to see whether they can happily live out their personal expression within the policy.

It’s a lot like retail can be, when done right. And it hinges on the question:

“Has culture been well-enough communicated to every employee so that he or she can act like the CEO of the company would in wide variety of circumstances?”

Or to put it another way, would Amazon owner Jeff Bezos be powerless to get me my vitamins?

The most accessible modern benchmark of good customer service — the online review — is what tells the public whether the CEO has “set the example.” Reviews tell whether time has been taken to acquaint every staffer with the business that employs them, preparing them to fit their own personal expression within the company’s vision of serving the public.

An employee who is able to recognize that an injured patron needs a seat while awaiting his prescription should be empowered to act immediately, knowing that the larger company supports treating people well. If poor training, burdensome chains of command, or failure to share brand culture are obstacles to common-sense personal initiative, the problem must be traced back to the CEO and corrected, starting from there.

And, of course, should a random staffer’s personal expression genuinely include an insurmountable disregard for other people, they can always be told it’s time to leave the monastery…

For marketing agencies, opportunity knocks

So your agency is auditing a valuable incoming client, and their negative reviews citing dirty premises, broken fixtures, food poisoning, slowness, rudeness, cluelessness, and lack of apparent concern make you say to yourself,

“Well, I was hoping we could clean up the bad data on the local business listings for this enterprise, but unless they clean up their customer service at 150 of their worst-rated locations, how much ROI are we really going to be able to deliver? What’s going on at these places?”

Let’s make no bones about this: Your honesty at this critical juncture could mean the difference between survival and closure for the brand.

You need to bring it home to the most senior level person you can reach in the organization that no amount of honest marketing can cover up poor customer service in the era of online reviews. If the brand has fallen to the level of the pharmacy I’ve cited, structural change is an absolute necessity. You can ask the tough questions, ask for an explanation of the bad reviews.

“But I’m just a digital marketer,” you may think. “I’m not in charge of whatever happens offline.”

If you were a retail brand C-suite and were swallowing these predictions of doom with your daily breakfast, wouldn’t you be looking for inspiration from anyone with genuine insight? And if a marketing agency should make it their business to confront the truth while also being the bearer of some better news, wouldn’t you be ready to listen?

What is the truth? That poor reviews are symptoms smart doctors can use for diagnosis of structural problems.What is the better news? The retail scenario is not nearly as dire as it may seem.

Why let hierarchy and traditional roles hold your agency back? Tesla wouldn’t. Why not roll up your sleeves and step into in-store? Organize and then translate the narrative negative reviews are telling about structural problems for the brand which have resulted in dangerously bad customer service. And then, be prepared to counter corporate inertia born of fear with some eye-opening statistics.

Print and share some good retail tidings

Print your own copy of this infographic to share with clients.

At Moz, we’re working with enterprises to get their basic location data into shape so that they are ready to win their share of the predicted $ 1.4 trillion in mobile-influenced local sales by 2021, and your agency can use these same numbers to combat indecision and apathy for your retail clients. Look at that second statistic again: 90% of purchases are still happening in physical stores. At Moz, we ask our customers if their data is ready for this. Your agency can ask its clients if their reputations are ready for this, if their employees have what they need to earn the brand’s piece of that 90% action. Great online data + great in-store service = table stakes for retail success.

While I won’t play down the unease that major brand retail closures is understandably causing, I hope I’ve given you the tools to fight the “retail disaster” narrative. 85% more mobile users are searching for things like “Where do I buy that reindeer moss vitamin D3?” than they were just 3 years ago. So long as retail staff is ready to deliver, I see no “apocalypse” here.

Investing time

So, your agency has put in the time to identify a reputation problem severe enough that it appears to be founded in structural deficiencies or policies. Perhaps you’ve used some ORM software to do review sentiment analysis to discover which of your client’s locations are hurting worst, or perhaps you’ve done an initial audit manually. You’ve communicated the bad news to the most senior-level person you can reach at the company, and you’ve also shared the statistics that make change seem very worthwhile, begging for a new commitment to in-store excellence. What happens next?

While there are going to be nuances specific to every brand, my bet is that the steps will look like this for most businesses:

C-suites need to invest time in creating a policy which a) abundantly communicates company culture, b) expresses trust in employee initiative, and c) dispenses with needless “chain of command” steps, while d) ensuring that every public facing staffer receives full and ongoing training. A recent study says 62% of new retail hires receive less than 10 hours of training. I’d call even these worrisome numbers optimistic. I worked at 5 retail jobs in my early youth. I’d estimate that I received no more than 1 hour of training at any of them.

Because a chain of command can’t realistically be completely dispensed with in a large organization, store managers must then be allowed the time to communicate the culture, encourage employees to use common sense, define what “common sense” does and doesn’t look like to the company, and, finally, offer essential training.

Employees at every level must be given the time to observe how happy or unhappy customers appear to be at their location, and they must be taught that their observations are of inestimable value to the brand. If an employee suggests a solution to a common consumer complaint, this should be recognized and rewarded.

Finally, customers must be given the time to air their grievances at the time of service, in-person, with accessible, responsive staff. The word “corporate” need never come into most of these conversations unless a major claim is involved. Given that it may cost as much as 7x more to replace an unhappy customer than to keep an existing one happy, employees should be empowered to do business graciously and resolve complaints, in most cases, without escalation.

Benjamin Franklin may or may not have said that “time is money.” While the adage rings true in business, reviews have taught me the flip side — that a lack of time equals less money. Every negative review that cites helpless employees and poor service sounds to my marketing ears like a pocketful of silver dollars rolling down a drain.

The monk says good leaders make the time to communicate culture one-on-one.

Tesla says rules should change if they’re ridiculous.

Chairs should be offered to sick people… where common sense is applied.

Reviews can read like this:

And digital marketers have never known a time quite like this to have the ear of retail, maybe stepping beyond traditional boundaries into the fray of the real world. Maybe making a fundamental difference.

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